Washington Archive

Washington

* WASHINGTON (7/20/09)—Sen. Christopher Dodd (D-Conn.) called it disgraceful that his Senate Banking Committee had to hold yet another hearing on the progress of government efforts to promote loan modifications intended to stave of mortgage foreclosure. Both Democrats and Republicans on the panel agreed. However, officials from the Departments of Treasury and Housing and Housing and Urban development reminded that the housing crisis was years in the making and the Obama loan modification program is just a few months old. Witness Herb Allison, Treasury's assistant secretary for financial stability, said 160,000 trial modifications have begun under its home foreclosure prevention program. (American Banker July 17)… * WASHINGTON (7/20/09)—Former Treasury Secretary Henry Paulson was unapologetic before the House Financial Services Committee as he acknowledged his agency pushed Bank of America’s chief executive Ken Lewis to agree to a merger with Merrill Lynch—or lose his job. Paulson said he and Federal Reserve Board Chairman Ben Bernanke were concerned that if B of A backed out of the deal, it could cause a collapse of the financial system, However, critics have questioned whether a bank chief executive's job should be used by the government to accomplish a policy goal. (American Banker July 17)…

WASHINGTON (7/20/09)—On July 28 at 1:30 p.m. (ET), the Credit Union National Association (CUNA) will hook up interested credit union representatives with financial industry experts who will address concerns about a 21-day notice period under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. CUNA has been working with the Federal Reserve Board to convey credit union concerns regarding a specific requirement in Section 106 of the CARD Act. That provision prohibits creditors from claiming a payment is late unless that creditor adopts reasonable procedures to ensure that periodic statements are delivered to consumers no later than 21 days before the payment due date. Last Wednesday, the Fed issued interim final rules to implement that and other CARD Act requirements. On next Tuesday’s 90-minute audio call, Fed Senior Attorney Benjamin Olsen and University of Wisconsin CU Chief Credit Officer Mike Long will be among the speakers available to outline the Fed plan and address credit union concerns. Long also chair's the CUNA Lending Council Regulatory Committee. At issue is the fast-approaching Aug. 20 compliance date for the notice provision, which stretches well beyond credit cards to also cover such things as: general lines of credit, lines of credit associated with share draft and checking accounts, signature loans, and home equity lines of credit and--of particular concern to credit unions--to multi-featured, open-end lending programs. CUNA has urged an extended compliance timeframe. Notably, when the Fed issued its interim rule, the agency indicated that "for a short period of time after August 20," periodic statements for open-end credit other than credit cards may disclose due dates that are inconsistent with the 21-day requirement under certain circumstances. However, the Fed has to date declined to define the ambiguous “short period of time.” Other experts on hand for the call include CUNA Senior Assistant General Counsel Jeff Bloch and CUNA Assistant General Counsel and Senior Compliance Counsel Mike McLain. Use the resource link below to register for this important session.

WASHINGTON (7/20/09)—An executive compensation “discussion draft” is now circulating among lawmakers and its designer, Rep. Barney Frank (D-Mass.) said his committee plans to mark up legislation this week. Frank, who is chairman of House Financial Services Committee, noted the draft is based on a House-passed 2007 “Say-on-Pay” bill combined with new U.S. Treasury Department proposals. The discussion draft, titled the Corporate Fairness Act of 2009, is comprised of four major components. Addressing credit unions and other financial institutions are sections labeled “Incentive-Based Compensation Disclosure Requirements” and “Compensation Standards for Financial Institutions.” The first proposes to require financial institutions to disclose compensation structures that include any incentive-based elements. The second would require federal regulators to proscribe “inappropriate or imprudently risky” compensation practices as part of solvency regulation. No limits on executive compensation are contained in the draft. John Magill, senior vice president of legislative affairs for the Credit Union National Association (CUNA) said Friday that credit unions can expect timely guidance from CUNA on the issues involved for credit unions. “We are carefully studying the committee’s draft and consulting credit union compensation experts about its impact on CUs,” Magill said.

WASHINGTON (7/20/09)—A bill that would, in part, allow the National Credit Union Administration’s Central Liquidity Facility to continue operating under its maximum amount through fiscal 2010 now awaits attention in the U.S. Senate. Late last week, the House approved the appropriations package by a very narrow 219-208 vote. The House measure note only seeks to allow the CLF to exercise its full borrowing authority in 2010—which currently equals about $40 billion, it also would provide $1.25 million for technical assistant grants for the NCUA’s —and Community Development Revolving Loan Fund. It also sets out $244 million for grants and assistance under the U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund, in which credit unions may participate. Early this month, the Senate Appropriations Committee passed a comparable bill, but with a lower, $168 million allotment for the CDFI Fund. That legislation also would appropriate $10 million for the U.S. Agency for International Development's cooperative development programs sponsored by such organizations as the World Council of Credit Unions (WOCCU). The WOCCU program helps credit unions in developing nations provide financial services to their members. With less than two weeks before the Congress adjourns Aug. 3 for its month-long Summer District Work Session, the Senate is not expected to vote on the appropriation measure until September.

WASHINGTON (7/20/09)—In a recent legal opinion letter, the National Credit Union Administration (NCUA) responded to an inquiry about whether a federal credit union is obliged to provide financial information to its sponsor labor union for the union’s annual Department of Labor (DOL) report for labor trusts. The NCUA stated that a federal credit union is not a trust within the meaning of the applicable DOL rule and, therefore, should not provide the financial information for the report. The inquiry was sparked by a recent DOL rule requiring labor unions to file a disclosure, Form T-1, for any trust “to which they contributed money or otherwise provided financial assistance or over which they exercised managerial control.” The NCUA’s legal opinion noted that three elements determine whether an entity is a trust for the purposes of a T-1 filing. They are:

* An entity must have been created or established by the labor organization, or the labor organization must have selected a member of the trust’s governing board; * It’s primary purpose must be to provide benefits to the members of the labor organization; and * The labor organization must select a majority of the board of directors or comprise 50% or more of an entity’s receipts over the course of the year

In the July 6 letter addressed to CFO Jeff Hampton of Operating Engineers Local Union No. 3 FCU, Livermore, Calif., NCUA Associate General Counsel Sheila Albin wrote that none of the three elements are satisfied.